Introduction
Relend Network provides stablecoin liquidity and credit infrastructure for every chain.
Stablecoins are a fundamental pillar of the crypto ecosystem, providing a bridge between traditional finance and decentralized applications. Deploying stablecoins across multiple chains presents unique challenges. We are pioneering a novel approach to multi-chain stablecoin that balances security, composability, and resilience. rUSDC enables liquidity provisioning by increasing total value locked (TVL) in money markets.
TL;DR
Relend Network generates a unique stablecoin for each chain. rUSDC is backed by lending market collateral and is redeemable for 1:1 for USDC on Ethereum. Relend deploys rUSDC directly into money markets on partner chains, providing local and global price stability modules for redemptions. This model provides a seamless way for users to interact with stable assets across different chains with confidence in backing and liquidity.
Why Stablecoins Need a Multi-Chain Approach
It is important to note that scalability is a core issue for stablecoins. In existing models, each stablecoin is minted against assets worth equal or more than the amount of debt taken, making liquidity distribution across multiple chains a complex problem due to the desirability of different collateral assets in each ecosystem. Deploying a unique stablecoin instance on each chain is highly appealing because it:
Facilitates liquidity by ensuring that each chain has a native stablecoin, which increases capital efficiency.
Enhances total value locked (TVL) within lending protocols, boosting market efficiency and the overall adoption of decentralized finance.
Reduces reliance on cross-chain liquidity mechanisms, leading to a more robust and secure ecosystem.
Different collateral assets for each ecosystem allow the stablecoin to support specific credit needs.
Through localized stablecoin issuance with independent risk management, Relend Network’s approach ensures that each chain benefits from a native liquidity solution while being part of a broader liquidity system.
Addressing Core Challenge of Multi-Chain Stablecoins
The two conventional approaches to multi-chain stablecoins come with significant trade-offs:
Unified Stablecoin Across All Chains: Deploying the same stablecoin on all chains provides a seamless experience, but if one network collapses (“gets rekt”), it jeopardizes the entire stablecoin system. The contagion effect makes it a high-risk approach. Providing credit at scale to multiple chains is inefficient, as risk to the entire system increases proportionally.
Isolated Stablecoin Instances Per Chain: This method ensures that a failure in one chain does not impact the others. However, it also means that the success of one instance does not enhance the stability of other L2 stablecoins, limiting liquidity and network effects.
Relend Network introduces a hybrid approach that captures the benefits of both models while mitigating their risks.
Example 1.1
Relend launches 3 rUSDC instances for x, y and z ecosystem.
Relend deploys $50m rUSDC.x into the supply side of a lending market on xChain.
Relend deploys $50m rUSDC.y into the supply side of a lending market on yChain.
Relend deploys $50m rUSDC.z into the supply side of a lending market on zChain.
Each deployment has a Local Price Stability Module (LPSM) on Ethereum mainnet ensuring 1:1 redemptions.
Relend's Global Price Stability Module (GPSM) is able to top up Local PSM's as needed.
In a scenario where the rUSDC.x LPSM becomes empty - the rUSDC.y and rUSDC.z LPSMs remain unaffected.
Relend has the option to top up the rUSDC.x LPSM from the GPSM after conducting risk analysis to ensure the reason for the rUSDC.x LPSM becoming empty is not due to issues with xChain or the xChain lending market but from extreme market conditions. Interest earned from rUSDC lending across all instances is shared with GPSM suppliers, leading to each new instance increasing global redemption liquidity.
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